Peter Forrence, co-owner of Forrence Orchards in Peru, NY, said that the
company is having a good season, but he added, "It's a little hard to know if
we’ll be short of supplies as we head further into 2011. The damage to citrus
due to the Florida freeze has put some pressure on alternative fruit items,
including apples."

Increased export demand has added even more pressure to the U.S. apple
supply this year, and Mr. Forrence said that more fruit is being exported to
Russia, the United Kingdom, Asia and other areas of the world.

“The factors that are increasing the demand for U.S. apples have allowed us to
market fruit at marginally acceptable levels this year,” he said. “Our overhead
continues to rise, but if market demand stays strong, this year should be
decent for apple producers.”

Rather than one continuous orchard, Forrence Orchards has numerous
orchard blocks in the Lake Champlain region of New York. Mr. Forrence said
that if a dot were put in the center of its growing area, it would extend about
15 miles in all directions. In total, the company produces apples on 1,100
acres.

The company is bullish on the Honeycrisp variety, which continues to reap
handsome rewards. It typically takes about 15 years for a new apple variety to
become successful at market, but it took the Honeycrisp only about eight
years for widespread acceptance and high demand, so the company is
watching its evolution carefully. Until about five years ago, there were not
sizable volumes available.

“We continue to be a big proponent of the Honeycrisp variety, and our
numbers continue to grow on it each year,” said Mr. Forrence. “There is a
move in the apple industry to propagate other 'club’ style varieties similar to
the Honeycrisp, but it’s a difficult apple to grow, and that is a deterrent to
some who would like to produce them. We believe the Honeycrisp will
continue to be a strong and growing variety.”

Mr. Forrence said that the company is also watching a couple of other club
varieties carefully. The yet-to-be-named NY1 and NY2 varieties were
developed by Cornell University and show promise for the future.

“These are on the horizon, and worthy of careful watch,” he said. “The NY1 is
delightful. It is crisp, beautifully colored and it has a unique flavor compared
to other varieties. Neither variety is available in commercial volumes yet, but
we are in the early stages of figuring out a marketing scheme for when they
are. There are very few trees in the ground, and most of those are young. It
takes about three years for an apple tree to begin producing fruit, and a year
or two more before it gives notable volumes. Some of what is being produced
is being sold at green markets.”

Overall, Forrence Orchards is having what Mr. Forrence said is “glorious
movement” this year. The orchards have been free of disease and insect
problems, and the crop is in excellent condition with high quality.

“Participants in the market are realizing that grower location is as import as
anything today, and the farther north apples are grown, the more acceptable
the fruit is,” he added. “Northern fruit is far superior to what is grown south of
New York City.”

The company is in the midst of installing a new packing facility and
expansion project that will allow it to pack more apples.

“This new packingline sizes, labels and waxes the fruit,” said Mr. Forrence.
“We don’t use an internal defect sorter because our apples are outstanding
quality due to the growing practices we have in place. We’ll be up and running
with this new line by February or March, with the intention to work out any
kinks and have it in our scheme before next season’s harvest. We don’t have
apples much past the end of May, so we’ll have a little time to give the
machine practice.”

Mr. Forrence added that prices on apples are solid this year, and are expected
to get stronger as the season progresses.